Smart Move

MGC Advanced Polymers joins the ranks of Richmond’s high-performance manufacturers. The region’s greatest advantage: A workforce knowledgeable in chemical processes.

by James A. Bacon

Next time someone prattles about “unfair” competition with China, Mexico or other countries with lower labor costs, just mention MGC Advanced Polymers, Inc. The Japanese chemical manufacturer is investing $18 million in a state-of-the-art manufacturing facility in Chesterfield County, Va., to produce 22 million tons a year of Nylon MXD6, a plastic used in auto parts and food packaging.

Many factors went into the decision to locate in the United States, including calculations of tariffs, shipping costs and inventories, but the decisive factor was the manufacturing process behind MXD6. “It will be a highly automated plant,” says President Tomiyoshi Furuta. “That’s why we can afford to put it in America.”

And why the Richmond region? Furuta cites the business-friendly environment, proximity to the ports in Norfolk and a central East Coast location. But a critical consideration was the nature of the workforce. A strong cluster of specialty chemical companies makes it easy to recruit the kind of employees that MAP is looking for. “The labor pool is very good,” Furuta says. “People are accustomed to working with polymers.”

Even in a hyper-competitive global marketplace, you can’t beat the combination of smart management and a skilled workforce.

MGC Advanced Polymers, which is 80 percent owned by Mitsubishi Gas Chemical, joins a long and growing list of chemical companies choosing to invest in the Richmond-Petersburg region. The past half year has seen plant openings or expansions by Boehringer-

Ingleheim (chemicals and pharmaceuticals), Goldschmidt Chemical Corporation (oligomers and silicons) and DuPont Engineering Polymers (Zytel polymer).

“The Richmond region has a superior geographic location and a dynamite industrial infrastructure -- but it’s the human capital that sets us apart in the chemical industry,” says Gene Winter, senior vice president with the Greater Richmond Partnership, the regional economic development organization. “Our workforce gives us an edge. We have thousands of experienced engineers, chemists and line workers versed in the unique challenges of chemical manufacturing.”

The number of chemical manufacturing jobs in the region has declined in the past five years, partly due to cyclical economic conditions and partly to gains in productivity. Extrapolating from national economic forecasts adjusted for the local industry mix, Chmura Economics & Analytics projects that the sector will shed another 1,000 jobs, equivalent to 12 percent of the local industry workforce, over the next decade. That trend, combined with a projected increase in chemical-related occupations, assures companies like MGC Advanced Polymers that they should have little trouble finding employees with relevant skills and knowledge.

Furuta, who has moved to Richmond to oversee construction of the plant, has worked for Mitsubishi Gas Chemical for more than 30 years, joining the company right out of school. The 57-year-old executive has engaged in the MXD6 project since 2001, when the company decided to expand its manufacturing capacity to meet growing demand.

A variant of the nylon molecule, MXD6 has two special properties: It holds up well to vibration fatigue, and it acts as an effective gas barrier. Those properties make the compound suitable for two very distinct markets. MXD6’s strength coupled with its ability to absorb vibrations makes it an ideal material for certain automotive applications, just as the mirror housing on car doors. Toyota, Honda and other auto manufacturers have substituted the polymer for metal in its side mirrors.

The other application is food packaging. Virtually impermeable to oxygen and other gases, MXD6 is highly transparent, easily recyclable and resistant to penetration – all virtues prized for the preservation and presentation of food and beverages. MGC supplies the raw compound in the form of BB-sized pellets to downstream manufacturers like Mitsubishi Engineering Plastic, which layers it with other materials to achieve optimal properties for particular applications. Food packagers like the compound because it is easy to work with and adheres easily to other polymers.

In U.S. grocery stores, MXD6 winds up in packaging for products ranging from ketchup and soy milk to cranberry juice and beer. The beer hawked in Yankee stadium contains his product, says Furuta, his serious visage breaking into a smile. “I have enjoyed,” he nods, raising his hand in a mock toast.

For a variety of reasons, Furuta explains, it makes sense to locate the new plant in the U.S. rather than supply the American market from elsewhere. Because the raw material is taxed at a lower rate than the finished product, a U.S. location will save on U.S. import duties. And by cutting out the 30 to 40 days it takes to ship the product, MGC can reduce inventory and shorten delivery times to U.S. customers.

Japanese production of MXD6 amounts to 30 million pounds a year. Production at the Richmond plant, scheduled to begin in early 2005, will have a capacity of 22 million pounds. The factory will be so automated that it will employ only 35 people – and 10 of those will be Japanese during the start-up phase. “Our purpose is localization,” Furuta says. Plans call for training Americans for most functions and to maintain only a couple of Japanese staffers.

His current assignment is his first time living in America, says Furuta, whose English is good enough that he can get by with only occasional recourse to his pocket translator. His main impression when he first came here: “America is very big.” Cities and neighborhoods are very spread out. He didn’t drive a car in Tokyo – he walked and took the electric train – but he couldn’t get by without one in Virginia.

Furuta has his hands full overseeing construction of the new plant, so he doesn’t have much leisure time. But life in Virginia has been an adjustment for his wife, whose English is limited. She misses her friends and daughter back in Japan, Furuta says. Fortunately, the Richmond area has an active branch of the Japan-Virginia Society, and he has made friends with Japanese working for nearby Wako Chemical.

On the plus side, Furuta has a spacious and comfortable apartment. He enjoys the shorter commute: Although he lives 20 miles away, it takes him considerably less time to get to work than it did in Tokyo. And he plans to take advantage of the great American outdoors. He’s played a few rounds of golf, which his father taught him as a boy, and can hardly wait to go hiking.

-- May 3, 2004